Startups are encouraged to seek loans, since they can be great opportunities to help a new business off the ground and add extra resources.
But not everyone realizes that other lending opportunities exist. In general, they all have the same focus – provide a burst of funding which can be used to help a business get through a particularly lean time.
Companies that have considered or applied for additional financing often use it for payroll first – a company’s success ultimately depends on its people, and very few employees are going to accept IOU in a critical time since they often will be experiencing the same disaster and want to make sure their families are provided for.
Businesses seeking more info about financing opportunities can include the following info.
- Read the fine print. There may be some specific details about the type of loan, including interest rates, length of the term, and any penalties for early pay-offs. In some cases, some loans may be forgiven if certain conditions are met, such as some federal disaster loans. Or there could be some conditions, such as larger payments later in the loan.
- Nothing to lose. Most business loans are intended to prop up a company that may be dealing with something difficult. But things continue to decline and the company is forced to close its doors and cease operations, the balance can be paid for in liquidation, not something that the business owner is stuck with.
- Lower interest rates. If you need a loan, you might be surprised how low rates are, along with a relatively short pay-off period. The good news is that the rate you have will usually be locked in when you get it. This keeps rates from jumping high if the economy starts improving a few months later.
- Be prepared. Although banks may say they have plenty of money for everyone, lenders may not authorize a loan for all sorts of reasons. That’s why you should be honest and provide accurate information about how much you’re requesting, your specific challenges, and more.
For more business strategies visit The Capital Rams.